For many families struggling with overwhelming debt, a bankruptcy filing offers the opportunity to get a new start and achieve financial stability. However, bankruptcy is not a “one and done” solution. It’s important to consult a bankruptcy attorney regarding exactly what you can expect from the process and how your life will change thereafter. After bankruptcy, you can indeed regain financial stability, but it will take some time to get there.
Adhere to a Budget
Many people prefer to request a Chapter 13 reorganization. If the court approves it, you’ll adhere to a repayment plan for the next three to five years. At the end of that time, your remaining dischargeable debts are eliminated. However, during this time, the court will decide how much money you need to pay your basic expenses. This means that you’ll have to avoid impulse buys or frivolous purchases and stick to a very strict budget. Even if you chose a Chapter 7 bankruptcy, you’ll need to adhere to a strict budget while you rebuild your finances.
Build an Emergency Fund
As soon as it is possible for you to do so, it’s critically important to establish an emergency fund. Your emergency fund will grant you peace of mind and you can rely on it for unexpected expenses, such as car repairs and medical expenses. Even if you can only contribute $20 per week toward your emergency fund, do so. Over time, you’ll be able to make more significant contributions.
It will take a while to improve your credit score after filing for bankruptcy. Within six months to a year of your bankruptcy discharge, consider applying for a secured credit card. Remember to pay all of your bills on time every month to rebuild your credit history.
Cutler & Associates, Ltd., a bankruptcy law firm, has been helping Chicago-area families break free from debt since 1990. With more than 30 years of combined experience, our bankruptcy lawyers can help you finally eliminate your debt and regain control of your life.